Türkiye’s Central Bank Signals Readiness to Act if Inflation Risks Rise Again
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Türkiye’s Central Bank Governor Fatih Karahan stated on Tuesday that the Central Bank of the Republic of Türkiye (CBRT) is fully prepared to intervene if shifting demand conditions threaten the ongoing disinflation process. Addressing the Parliamentary Planning and Budget Commission, Karahan emphasized the CBRT’s commitment to a tight and cautious monetary policy in the face of persistent inflationary pressures.
“If developments in demand conditions negatively affect the disinflation process, we will take the necessary measures,” Karahan said, reiterating that the bank will use all available policy tools to maintain stability.
Hits Three-Year Low But Risks Remain
According to official data released by TurkStat, Türkiye’s annual inflation dropped to 37.9% in April — its lowest level since December 2021. However, monthly inflation rose to 3%, largely attributed to a decline in the Turkish lira triggered by political turmoil, notably the arrest of Istanbul Mayor Ekrem İmamoğlu on corruption charges, and uncertainty over new U.S. tariffs.
The depreciation of the lira and investor concerns caused temporary market volatility, which prompted the CBRT to reverse its rate-cut cycle, reasserting its dedication to inflation targeting.
Inflation Forecast and Rate Policy Adjustments
Despite easing cost pressures and a slowdown in inflation, Karahan noted that expectations remain above the central bank’s disinflation path, warranting a firm policy approach. The CBRT projects year-end inflation at 24%, within a forecast band of 19% to 29%.
In response to the deteriorating market sentiment in March, the CBRT made a surprise 350-basis-point rate hike, lifting the benchmark rate to 46% in April. The decision followed earlier cuts in December and March and was intended to restore confidence and stabilize Turkish assets.
Global Commodity Prices May Help Cushion Lira-Driven Pressures
Karahan also pointed to declining global commodity prices — a result of sluggish trade growth — as a potential buffer against currency-related inflation pressures. However, he stressed that the bank would continue to proactively manage monetary policy to maintain financial stability.
“To ensure efficient market functioning, we will decisively use all tools within market rules,” he stated, signaling a continued readiness to act decisively.
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